Jul 28, 2010
Improved Soy Prices during July Spur Forward Selling in Brazil
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Brazilian soybean farmers always watch the U.S. soybean market very closely during the month of July because that is when concerns about the U.S. weather can cause soybean prices to strengthen. July usually offers one of the best opportunities for Brazilian to sell their soybeans and it happened again this year. The March 2011 contract started out the month of July at US$ 9.22 a bushel and peaked several weeks later at about US$ 9.90 a bushel. This was enough of an increase to convince many Brazilian soybean farmers to sell the remaining 2009/10 production and to forward contract some of their 2010/11 anticipated production.
The price run up in the March 2011 contract during the month of July has been strong enough to persuade Brazilians to make some forward sales. According to the Mato Grosso Institute of Agricultural Economics, Mato Grosso soybean farmers have already forward sold 15.6% of their anticipated 2010/11 soybean crop compared to 12.5% that was forward sold last year at this time. The farmers also took advantage of the prices to sell whatever crop that was left over from last year's production. It is estimated that 6% of the 2009/10 production was sold during the month of July, which brought the total 2009/10 sales in Mato Grosso to 90%, which is just slightly ahead of last year's pace.
The soybeans were forward contracted for US$ 8.25 to US$ 8.50 a bushel in Campo Verde, which is located in southeastern Mato Grosso. In Sapezal, which is located in western Mato Grosso, the soybeans were sold for US$ 8.25 a bushel. In Nova Mutum, which is located in central Mato Grosso, the price was between US$ 7.50 to US$ 7.80 a bushel. These prices were quoted for February 2011 delivery.
During the first half of 2010, Mato Grosso exported 6.6 million tons of soybeans to various destinations. China was the number one destination for Mato Grosso soybeans accounting for approximately 60% of the total. Second was Spain which accounted for 7% followed by Holland at 6%. The remaining 20% went to various other destinations.